WASHINGTON (Thomson Financial) - The World Bank said it is to launch a 5 bln usd fund to invest in emerging economies' local currency bond markets.
The Global Emerging Markets Local Currency Bond Fund (GEMLOC) will mobilise money from public and private institutional investors and will invest initially in 15-20 emerging markets.
These could include Brazil, China, Russia, India and Malaysia, the World Bank said.
'This effort will enhance the ability of governments and other issuers to raise long-term financing in local currencies,' said Bank Negara Malaysia governor Zeti Akhtar Aziz.
'This would contribute towards greater financial stability and economic growth. GEMLOC should encourage a positive shift from short-term inflows towards stable, long-term investment in local bond markets,' Zeti said.
The World Bank said the fund will provide greater liquidity and depth to local currency bond markets and offer investors a broad diversified portfolio of local currency bonds.
Michael Klein, chief economist at the World Bank's IFC investment arm, said the fund could be operational in the first half of 2008.
Its investments could be extended to around 40 countries within five years, the bank said. steve.whitehouse@thomson.com sw/ro COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.